News

Tim Hortons CEO: U.S. market a priority for long-term growth

August 8, 2013

Tim Hortons Inc. announced its 2013 second quarter results today, which includes positive same-store sales growth in both its Canada and U.S. systems.

Canada's same-store sales were up 1.5 percent, while U.S. sales were up 1.4 percent.

Additionally, EPS growth jumped 17 percent in the quarter, and adjusted operating income was up 10.7 percent.

President and CEO Marc Caira said the profitability and same-store sales progression were achieved despite the still-challenging environment.

"The operating environment continued to be challenging in the second quarter. We believe ongoing macro-economic uncertainty and low growth has been impacting consumer confidence and discretionary spending in both Canada and the U.S, leading to an overall intensified competitive environment, and ultimately, a negative impact on the performance of several restaurant chains and consumer companies," he said. "Despite these challenges, we returned to positive same-store sales growth in the second quarter of 2013 after experiencing declines in the first quarter."

Canada's same-store sales bump was driven by gains in average check – mostly due to pricing. This was partially offset by a decrease in transactions. However, systemwide transactions grew as Tim Hortons added more restaurants. Twenty-one units opened in Canada during the quarter.

U.S. same-store sales were driven primarily by an increase in transactions. Tim Hortons opened five standard and non-standard restaurants in the U.S. during the quarter.

"We believe the U.S. market has the potential to significantly contribute to the company's long-term earnings growth, and we are committed to driving market success. Our sales progression in many U.S. markets mirrors that of many of our Canadian markets in their early development stages," Caira said.

The company is currently seeking "meaningful improvement" in the returns on the capital deployed in the U.S. business, and has accelerated its initiative to partner with well-capitalized franchisees as part of its development approach.

"While development capital in 2013 is mostly committed, starting in 2014, we expect to reduce capital being deployed in the U.S. segment as we look to new ways to profitably develop the U.S. market," Caira added.

Other Q2 news

Also during the quarter, Sherri Brillon and Thomas V. Milroy have been appointed to the Tim Hortons board of directors, effective today.

Brillon is executive vice president and chief financial officer of Encana Corporation, a North American energy producer. Milroy is CEO of BMO Capital Markets, and is responsible for all of BMO Financial Group's businesses involving corporate, institutional and government clients in North America and globally.

And, Tim Hortons' board of directors today declared a dividend of 26 cents per common share payable to shareholders of record as of Aug. 19, 2013. The dividend is payable on Sept. 4.

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